Im convinced none of these people have any training in corporate finance. For if they did they'd realise they were wasting money.
I guess you gotta look busy. But the stick will come when the shareholders look at the income statement and ask... So I see an increase in operating expenses. Let me go calculate the ROIC. Hm its lower, what to do? Oh I know, lets fire the people who caused this (it wont be the C-Suite or management who takes the fall) lmao.
Do you really think companies have started spending millions on tokens and no one from finance has been involved?
You could argue that all the spending is wasted (doubtless some is), but insisting that the decision is being made in complete ignorance of financial concerns reeks of that “everyone’s dumb but me” energy.
There is a difference to just noticing and attributing it to and recognizing negative financial outcomes. Right now for most companies they are still adjusting to declining inflation. Their bottom lines are doing quite well because consumer price inflation is much stickier than supply inflation. We are coming off of one of the quickest and largest supply lead inflationary cycles. It may not be immediately apparent for many companies that new expenditures are a drag on profitability.
The real thing to look at is whether or not the future outlook for company AI spend is heading up or down?
> Do you really think companies have started spending millions on tokens and no one from finance has been involved?
Oh, they were involved all right. They ran their analyses and realized that the increase in Acme Corp's share price from becoming "AI-enabled" will pay for the tokens several times over. For today. They plan to be retired before tomorrow.
That magic trick only works for publicly traded stocks.
Most firms are not a google or a Microsoft - a firms cash balance can become a strategic weapon in the right environment. So wasting money is not a great idea. Lest we forget dividends.
Moreover if you have a budget set re. Spend on tokens - you have rationing. Therefore the firm should be trying to get the most out of token spend. If you are wasting tokens on stuff that doesn’t create a benefit financially for the firm then indeed it is not inline with proper corporate financial theory.
No, it works for any VC-backed companies. Something like 60% of VC funding last year went to AI companies. VCs aren't going to give you a money unless you're building an agentic AI-native agent platform for agents.
No Employees of publicly traded firms benefit from short-term gains in the stock price, assuming the stock price jump holds throughout the period of grant/vesting.
People who work at VC-backed firms do not get to enjoy the same degree of liquidity, not even close. There can be some outliers but that is 0.1% of all.
Can't believe simple stuff like this has to be said.
CFOs or VPs absolutely benefit by hyping their company up to private investors by allowing tokenmaxxing to go on unchecked. Tender offers, acquisitions, and aquihires all exist. Or just good old fashioned resume padding by saying you "enabled AI transformation" or whatever helps you land a big payday at some other company.
More that there is a poor incentive structure. Just like how PE can make money by leveraged buyouts and running businesses into the ground. Many of the financial instruments that make both that and the current AI bubble possible were legal then made illegal within the lifetimes of the last 16 presidents.
Round-tripping used to be regulated. SPVs used to be regulated. If you need a loan you used to have to go to something called a bank, now it comes from ???? who knows drug cartels, child traffickers, blackstone, russians & chinese oligarchs. Even assuming it doesn't collapse tommorow why should they make double digit returns on AI datacenters built on the backs of Americans?
The only thing that matters is the impact on the financials. The shareholders (the people who employ you) dont care about any of this if it does not enhance value.
"(And how competently Dario has played his hand.)"
lol hes barely done anything, but sometimes that is all that's necessary when a bozo opponent is hell-bent on screwing things up. He didn't get fired the first time for no reason.
> hes barely done anything, but sometimes that is all that's necessary when a bozo opponent is hell-bent on screwing things up
An former chess instructor told me most games are won not by brilliant maneuver, but by not screwing up. Repeatedly making the boring play is a winning strategy far more often than any mastermind play.
As long it further's American interests globally - monopoly is fine. Other countries need to take notice and start picking winners nationally in order to compete with the large American big tech firms.
Eh, I think this is actually not a specifically American thing. More of a neo-liberal mindset. Competition may be good in the long term. But a monopoly now may mean more money in your pocket now. The tech giants definitely give the US some geo-political power in some cases but in general the US would be better off with more competition.
ed: @er2d, can't reply to your comment for some reason, so doing it here:
I don't agree. In theory a monopoly decreases the necessity for R&D. Of course this becomes more complex if the R&D is funded or steered by the state. But look at the current state of LLMs. There is fierce competition between 3 US companies. But geopolitically it's the same as if there would be one monopoly. The US being the clear technological leader in an industry is not dependent on that industry being a domestic monopoly.
And for the Europe comment:
Also don't agree. Look at Boeing & Airbus. Both are companies where the US & EU have decided that they need to ensure the existence of a domestic airplane manufacturer. So in these cases they support these companies (often in violation of international trade laws). But it has nothing to do with monopolies. If a state decides to support a company to ensure its existence, a monopoly is the logical consequence and not the aim. Because if that industry would be profitable it wouldn't need to be supported in the first place.
But all these tech companies are not in industries that would move off-shore or stop existing because they're not profitable enough, so it's an entirely different setting.
You’re wrong actually I suggest you read a book on industrial organisation and why monopoly is a more efficient market structure in relation to incentives for R&D.
Why do people comment on stuff they barely have an understanding of? Comical. People like you create noise.
I guess you gotta look busy. But the stick will come when the shareholders look at the income statement and ask... So I see an increase in operating expenses. Let me go calculate the ROIC. Hm its lower, what to do? Oh I know, lets fire the people who caused this (it wont be the C-Suite or management who takes the fall) lmao.